Lexmark Strategic Alternatives

by Steve Segall, MBA '14 (6/6/13)

We finally made it to the end of the semester! Well, we were almost done. All that stood in the way of our coveted summer break and internship was our final assignment: a strategic alternatives pitch that included a presentation to the CFO of a Fortune 500 company and a small team of investment bankers.

The final case for the practicum was a strategic alternatives pitch to Lexmark International, Inc. (NYSE: LXK). Our assignment was to pitch John Gamble, the Executive Vice President and Chief Executive Officer (and Cornell graduate), specific strategies to grow Lexmark and increase shareholder value. Our analytical and presentation skills would be put to the test as we not only presented our analysis to the CFO, but also fielded questions from a small group of investment bankers who joined us for the presentation.

Lexmark is a $2Bn company that specializes in printing and imaging services as well as technology. Lexmark is in the process of a multi-year transformation from a technology-focused producer of printing and imaging devices to an end-to-end solutions provider, focusing on delivering managed print services, document management, and advanced enterprise content management solutions for companies world-wide.

While we had been given loose guidelines and a few potential alternative strategies to consider, the decisions on how to analyze the strategy, value the business, and structure the pitch was up to our team. This final project combined all of the knowledge and expertise we had learned throughout our first year at Johnson and required us to utilize all the modeling and presentation skills we have been developing and perfecting all semester in the IB Practicum.

One of the more exciting aspects of the project for me was that I was able to apply what I had learned from my experience at Xerox to the assignment. While working in the treasury for Xerox, I learned a tremendous amount about the managed print services industry that proved to be very beneficial throughout the course of the project. I was able to aid my team by educating them about the industry, the major players, and recent trends that helped drive our team’s final recommendation for Lexmark: acquire a UK-based services and technology company and expand its services capabilities.

Our team’s final product was far and away the best presentation we made all semester. Our delivery to John and our classmates was crisp and well delivered, and our answers to his questions were thoughtful and logical. This was the result of a year of hard work and countless hours spent in the Parker Center obsessing over model assumptions and the alignment of text boxes on PowerPoint slides and sifting through mounds of text and data from a seemingly endless supply of SEC filings and analyst research.

In choosing a business school from which to launch my career into investment banking, I sought a program where I would get hands-on experience so that I could hit the ground running when I got to the Street. As the semester comes to an end, I have found that the IB practicum was everything I had expected: it was a fully integrated, experienced-based program where we were truly immersed in the life of an investment-banking associate. The goal of the course was to prepare us for our summer internships by analyzing current transactions in real-life scenarios and I can attest that we did all that and more on a weekly basis. Throughout the semester, we covered numerous industries and analyzed M&A’s, IPO’s, follow-on offerings, SPAC’s, LBO’s, leveraged recapitalizations, a debt transaction, and made a pitch directly to a Fortune 500 CFO.

I feel very prepared for the summer and am grateful that I made the choice to come to Johnson. Thank you for a great first year!